- Intel and AMD are signing long-term server CPU deals with Chinese clients amid surging prices, according to *Reuters*.
- The agreements typically lock in purchase volumes but not prices, reflecting the strong AI infrastructure demand that continues to tighten the market for data center chips.
- Prices for some server CPUs in China have risen more than 40% since the start of the year, with some products seeing monthly price increases of more than 10%.
Intel and AMD are entering long-term supply agreements with Chinese server customers as demand for AI-driven data center processors escalates, pushing prices up by over 40% this year. The agreements, which may last two years or longer, aim to secure supply amid rising costs and competition.12
The shift towards longer-term deals reflects a broader trend in the chip market, where AI-fueled demand has tightened supply chains. As companies invest heavily in AI data centers and computing clusters, securing stable supply has become critical. Intel CEO Lip-Bu Tan noted that demand for Xeon server processors continues to outpace supply, with lead times extending up to six months for some products.
The proposed agreements typically lock in purchase volumes but allow for flexible pricing, a necessity given the rapid price increases. AMD has also raised its forecast for the server CPU market, projecting it to exceed $120 billion by 2030, driven by strong demand from agentic AI applications.34
As China remains one of the largest server markets globally, the competition for Intel and AMD processors is intensifying, especially as buyers navigate U.S. restrictions on advanced AI GPUs. The ongoing AI boom is reshaping the landscape for server CPUs, memory, and networking gear, giving suppliers greater leverage in negotiations.
“The long-term agreements lock in purchase volumes but not prices, with some spanning two years or longer, according to sources. Intel CEO Lip-Bu Tan said demand for Xeon server CPUs continues to outpace supply, and AMD has raised its server CPU market forecast to over $120 billion by 2030.”
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